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7 Reasons to Buy a Savings Plan

dateKnowledge Centre Team dateDecember 30, 2020 views79 Views
7 Reasons to Buy a Savings Plan

The phrase "A Penny Saved Is A Penny Earned." is extremely appropriate in this contemporary world. The importance of saving your hard-earned money cannot be understated. Saving money is undoubtedly one of the best financial practices any individual can adopt. According to a statistic by Firstpost, India has the highest income disproportion among prime global economies, especially in a country like India. It’s high time, people need to change.

In today's day and age, everyone wants to live an extravagant life, and there's no problem with that. However, people need to understand that saving money does come with sacrificing a luxurious life; all you need to do is spend on the things you really "need." You can still have the life you want with some extra cash for backup and security with a life insurance plan.

Why do you need to save money?

It may seem obvious, but people don't practice the obvious. Most of the time, we think of money as something that should be saved for the future and rightly so. Besides just investing it in the future, money's value plays a larger role in reflecting our ethics and judgements. Below are a few more reasons why one must be conscious about saving instead of focusing on spending:

1. It will aid you in the event of a financial emergency.

Money is power, and we all know that considering we live in a capitalist economy. In your worst financial crises, your savings can help you pay for a large hospital bill, help you avoid debt or leave a financial legacy even after you've lost the majority of your income. Saving can reduce a lot of financial stress during emergencies. Saving helps you in all kinds of financial distress, and most distress is bestowed upon us without any notice. The best example is the current-sinking economy where savings have ensured that the school fees are paid and that the household continues to function despite a job loss.

2. Wings to pursue your dreams

"Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver". –Ayn Rand. This phrase says it all. Money can take you wherever you wish; it is one of the essential tools that you need to fulfill your dreams. To learn something new, to start something new, for everything you need the money and your savings can complement in these areas of your life making you financially stable enough to go for whatever you want in life.

All good ideas and innovation require some seed funding. Occasionally you may not get this funding from investors and to get your entrepreneurial venture off the ground, your saving can be ideal.

3. Long term Security

In a country like India, where people prioritize security above everything, everyone needs to start saving money if they want to be secure in the future.

As stated earlier, your financial emergency, your medical emergency, your life after retirement, everything will get covered with a simple practice of saving money. All your hard-earned money will form the backbone of your future and provide long-term security in the real sense. Furthermore, unless you are in a government job, your salary or job itself is never stable. In a hire and fire economy, you could lose your job at any point in time. If not that, then your salary is determined by rising and falling market forces, therefore affecting a possible retirement plan or allowing for you to have stable enough income to save for long term security.

4. Saving for Fun

As stated, you don't have to sacrifice your dream luxe life for the sake of saving money and security. These savings will compliment you on enjoying your life to the fullest, without any financial stress. Saving money has never been a practice to hamper your joy. It's critical to balance your financial savings and physical well-being. It would be best if you keep some savings aside for a holiday you might want to take when you retire.

How to save money?

Saving money is never as simple as just cutting back on expenses. It goes much beyond that, depending on what your priorities are. An excellent way to start saving is by assessing the status quo and understanding how you are spending in the first place. Redistribute your funds by making a list of your priorities- at the same time, ensure you budget each of these expenditures. For example, if your salary is 50,000 a month, keep aside 8,000 every month as savings. Put it into an FD or a long term investment plan. The rest of the money should be redistributed to meet your living expenses.

In the long run, the best way to save is by investing your savings in investment plans. If you keep your savings at home, it won't grow and will be a static flow. However, if you keep your savings in a savings bank account, you may earn an interest rate ranging from 4-6% per annum. You can earn even higher benefits by entirely investing your money in a savings plan.

What are savings plans? Why should you have one?

Savings plans are life insurance plans that offer individuals an opportunity to save, invest, and accumulate funds for their future. These saving plans help individuals invest systematically and disciplined, creating regular saving habits for policyholders, bringing significant returns.

You can have a saving plan with flexible features according to your needs and requirements. This type of plan often proves to be among the best plans in India.

There are multiple reasons why you should consider buying a saving plan:

1. Coverage

As a life insurance product, a savings plan offers coverage that safeguards your loved ones. A saving plan will provide financial coverage to your family after your demise. This way, you can secure your family even after you depart, as you would have a financial legacy for them to survive the emergency.

2. Flexibility

As mentioned before, you can tailor your savings plan as per your requirements and future goals, right from selecting the funds according to your objectives to increasing your premium while paying the terms.

Everyone is different and has different goals, objectives. So when you choose a typical investment, you must consider the flexible nature of a savings plan and choose a customized plan based on an individual's future objectives and risk appetite.

3. Liquidity

Irrespective of your premium paying term or policy is, after the lock-in period of five years, one can entirely or partially withdraw funds from their account in case of urgency.

4. Systematic Savings

People know the benefit of saving money still they lack the practice and knowledge on saving their hard-earned. A savings plan encourages the individual to form a habit, more appropriate a habit of systematic and disciplined saving. One of the most important benefits of a savings plan apart from the significant returns is it teaches the disciplinary habit of saving within a person.

5. Wealth Growth

A saving plan not only saves your money but helps it to grow at a rapid pace by investing your money in market linked-funds.

6. Helps Save Taxes

Since saving plans are a form of life insurance plans, they offer the likewise tax benefits offered by additional insurance plans. In particular, you can avail of a release of up to Rs 1.5 lakh towards your premium payments, as per Section 80C of the Income Tax Act.

The maturity sum received is also excluded subject to conditions under Section 10(10D) of the Income Tax Act, 1961.

7. Helps you meet your objectives efficiently.

Saving plans customized to fulfil your future goals and objectives in the most efficient way possible. For example, specific saving plans are designed as investment plans to aid you to save up and meet the determined educational goals you may have set for your kids.

How to choose the right saving plan?

You must choose the right kind of saving plan to suit your needs and objectives to fulfil your future goals. To choose the accurate saving plan for yourself, you must first set your goals and investment plans. Figure out your short-term and long-term goals that you want to fulfil from investing in a savings plan.

After that, you will need to finalize the investment mark and the degree of risk you want to take. Before heading out for different savings plans, you need to be clear in your head about what you want and how you want, and figure out the amount of calculated risk you are willing to take.

It would then help if you researched different saving plans - their flexibility, unique features, terms, conditions, interest rates, etc. Finally, choose the best plans accordingly, enjoy the returns, and fulfil your dreams.

It is never too late to invest in a saving plan and get started on your journey towards attaining critical life goals and fulfilling your dreams. For that, you need a reliable and profitable saving plan such as the Invest 4G Plan from Canara HSBC Oriental Bank of Commerce Life Insurance. Canara HSBC Oriental Bank of Commerce Life Insurance is one of the most flexible, trusted, and advanced saving plans that you can invest in India.

This ULIP plan provides a wide variety of choices from seven different funds and four portfolio strategies. Moreover, you can enjoy special features such as loyalty additions, wealth boosters, as well as the return of mortality charges on maturity. What else do you need?

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Frequently Asked Questions

What is saving plan?

A savings plan is likely to be different for everyone depending on the financial goal, risk profile, returns, and investment horizon. If you are young and want to save for your retirement, ULIPs like Invest 4G or Titanium Plus plan would be the best option. You are likely to create a large corpus by your retirement through market-linked returns if you invest in this savings plan. If capital protection is your aim, then traditional insurance plans such as Guaranteed Money Saving Plan should be suitable for you.

Who should invest in a Savings Plan?

If you are looking for a guaranteed income plan, then saving plans should be on your list of investments that you are planning to make. Savings plan require you to invest a pre-decided amount on a regular basis. People with a regular stream of income who require a lump-sum amount after a period should opt for a savings plan. Working professionals, self-employed people and businessmen should consider a savings plan to meet their long-term financial obligations. Saving plans are also ideal for people who are risk-averse and want to accumulate funds through relatively safer mediums. These saving plans inculcate financial discipline in policyholders which make them crucial for every portfolio.

How much money should you put in savings each month?

The amount that should be invested in a savings plan each month depends on the income, existing financial obligations and the long-term financial goal. If you have a steady income, you should save at least 20% of your monthly income. It is not necessary to invest your entire money into a savings scheme as investments should be diversified. Ideally, you should aim to have a financial buffer of over 10 times of your annual income. Choose an income plan based on your financial circumstances to stay afloat.

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What is the difference between saving and investing?

Saving is the money that you keep aside for emergencies or for buying any big-ticket item. Investing means growing or multiplying the wealth that you have by buying savings plan, or any other assets. Buying a savings plan will help you in achieving your investment goals such as retirement, your child’s higher education or marriage, or for buying a new house.

Which savings plan is best for retirement?

The Invest 4G plan with its multiple investment options and various portfolio management strategies for capital protection is an ideal saving plan for retirement. Also, Guaranteed Income4Life is also another savings plan that you can consider for building your retirement corpus as it acts as a guaranteed income plan that will provide you maturity benefits to manage your post-retirement expenses.

Which savings plan is best for long-term goals?

Smart Goals Plan is a savings plan with its unique features such as modification of the sum assured partial withdrawal and fund switch can help you plan for your long-term financial goals. Canara HSBC Oriental Bank of Commerce Life Insurance offers a wide variety of saving plans that you can invest in as per your risk appetite and investment goal.

Which savings plan is suitable for girl child?

The Future Smart unit-linked plan from Canara HSBC Oriental Bank of Commerce Life Insurance is the ideal savings plan for the girl child. Monthly Income Advantage Plans are also a good option if you are planning to invest in a savings plan for your girl child.

Where should I invest my money?

You should spread your investments across financial instruments. However, having the best savings cum guaranteed income plan in your portfolio is extremely important. Savings plan ensures financial stability and also helps in fulfilling short, medium and long-term monetary goals.

What is a monthly income advantage plan?

A monthly income advantage plan ensures that you lead a stress-free life with your loved ones as it provides a life cover along with giving you guaranteed monthly income. In short, it is a life insurance and income plan that will financially secure commitments made to your loved ones. Canara HSBC Oriental Bank of Commerce Life Insurance Guaranteed Income Advantage Plan is a monthly income advantage plan that provides life cover for the entire term while you pay premium only for a limited period.

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What is a good age to start saving money?

When you plan to invest in a financial product, it always pays well to start early. The earlier you start saving and investing, the better. When you start investing early, the capital gets adequate time multiply. Even a small amount invested for a long time can give substantial returns due to compounding in a savings plan. Invest in an income plan as early as possible to build a significant corpus that will later help you in life. Ensure that you buy the best saving plan in India that can be aligned with your investment goals.

Should you use a savings plan for retirement planning?

Yes. Retirement planning is one of the most important financial decisions of our lives. The best saving plan offers a host of features that may help you build your retirement corpus. Some of the saving plans like Guaranteed Income4Life offer guaranteed returns at policy maturity. Such returns can act as a regular income stream even after your retirement to help you stay financially stable.

Are saving plans beneficial for managing unexpected expenses?

Yes. Best saving plans in India offer partial withdrawal system that can be utilized during your rainy days. Being financially prepared to tackle such odds will help you manage any unforeseen expenses in a smooth manner. Buy a monthly income advantage plan that will generate a steady source of income for you to take care of both long-term and short-term financial goals.

How to save tax by using savings plan?

Saving plans are known for helping us achieve our financial goals. Best saving plans allow you to grow your wealth while providing life cover. Saving and investment plans are also beneficial for tax planning. Premiums of savings cum protection plans come with tax benefit under Section 80C of the Income Tax Act. Moreover, proceeds received upon the death of the policyholder or upon the maturity of the policy are tax free under Section 10 10(D).

What is the right age to start saving money?

When you plan to invest in an income plan, it always pays well to start early. The earlier you start investing in a savings plan, the better. When you start investing early, the appreciation in capital is significant. Even a small amount invested in the best saving scheme for a long time can give substantial returns due to compounding. Buy the best savings plan as soon as you start earning to achieve all your milestones on time.

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How a savings plan can help in building your child’s education fund?

Saving plans help in building wealth over time against the investments that you make. Buy the best savings plan to build an education fund for your child. The best saving plan for kids offered by Canara HSBC Oriental Bank of Commerce Life Insurance eases the stress of planning your child's future by providing a lump-sum payout on the investment. Consider investing in a monthly income advantage plan to assist you in fulfilling your financial goals.

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How Savings Plans by Canara HSBC Oriental Bank of Commerce Life Insurance can help you?

Every person has a unique reason to save and invest. With ULIP savings schemes, the company caters to people seeking wealth creation through capital appreciation. Contrarily, the traditional plans can help you save for important life goals without worrying about the fluctuation in fund value. All major savings plan offers partial withdrawal facility that can help you take care of unplanned contingencies. With savings plans from Canara HSBC Oriental Bank of Commerce Life Insurance, you get adequate flexibility while investing and receiving the savings benefits, which makes them a good investment choice for investors looking for income plans.

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